Critical Shifts:
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Diverging Outlooks: Dealer sentiment for the current market rose for the second consecutive quarter to 43, driven by a healthy spring selling season, but future expectations dropped sharply due to economic and consumer demand anxieties.
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Franchised vs. Independent Divide: Franchised dealer sentiment climbed five points to a positive 53, buoyed by steady new-vehicle inventory and strong online customer traffic, whereas independent dealer sentiment remained weak at 40 amidst tight used-vehicle inventory.
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Economic Headwinds Dominate: The overall economy, fueled by persistent inflation, high fuel costs, and consumer affordability issues, remains the top hurdle, keeping the overall market index below the positive threshold of 50.
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The Q2 2026 Cox Automotive Dealer Sentiment Index (CADSI) shows a second consecutive quarterly gain in dealer current market sentiment, driven by stronger conditions following a healthy spring selling season. However, expectations for the months ahead declined sharply, reflecting growing concern about the economic outlook and consumer demand.
“The gains this quarter are in line with seasonal expectations we’ve seen in the past,” said Mark Strand, deputy chief economist at Cox Automotive. “Sales in March and April were healthy and helped boost current sentiment, but rising inflation, elevated fuel costs and geopolitical uncertainty are weighing on dealer confidence for the months ahead.”
Current market sentiment rose to 43 in Q2, up from 41 in Q1, marking a second consecutive quarterly increase. Despite the gain, the index remains below 50, indicating most dealers still view conditions as weak. Franchised dealers reported a current market index of 53, an increase of five points and signaling generally positive conditions. While independent dealer sentiment improved in Q2, it remained well below the positive threshold at 40. Sentiment toward customer traffic showed a notable rebound in Q2, rising 8 points to 36 from near-record lows in Q1. Gains were observed by both franchised and independent dealers, with franchised dealers reporting stronger performance, particularly in online traffic.
Dealer profitability improved modestly in Q2, with the profit index rising to 36 from 32 in Q1. New-vehicle inventory levels for franchised dealers held steady, while used-vehicle inventory remained tight
Dealers identified several key headwinds limiting business activity in Q2, led by broader economic concerns. The Economy remains the top factor holding back business, cited by more than half of dealers, reflecting ongoing concerns about inflation, fuel costs and overall consumer affordability.
